Federal Regulators Take Over Bradford Bank, Which Fell Victim To Bad Loans

M&t Buys Most Assets From Fdic

Federal regulators seized Bradford Bank of Towson late Friday after the financial institution failed to find a buyer, making it the second bank in Maryland to fall victim to bad loans amid the collapse of the real estate market.

M&T Bank, which recently acquired Baltimore's Provident Bank and is one of Maryland's largest lending institutions, will assume all of Bradford's deposits and most of its assets in a purchase agreement with the Federal Deposit Insurance Corp. That means Bradford's nine branches, mostly in Baltimore County, will reopen today as M&T offices and business will go on as usual.

Bradford, founded in 1903, had $452 million in assets and $383 million in deposits as of June 30, according to regulatory filings. The deal is expected to cost the FDIC $97 million.

In late January, regulators shut down Suburban Federal Savings Bank of Crofton, Maryland's first bank failure in 17 years. Suburban's deposits were sold to the Bank of Essex in Tappahannock, Va.

The FDIC said Bradford's deposits will continue to be insured by the federal agency. Up to $250,000 per individual per account is FDIC-covered. Bradford customers can continue writing checks or using ATM cards through the weekend, the FDIC said. Checks will continue to be processed, and loan customers should make their usual payments.

"People need to be calm. They don't need to change anything," said Glenn A. Watler, an FDIC ombudsman who was at Bradford's headquarters on York Road when regulators entered the bank.

Several M&T officials gathered at the parking lot of Bradford's headquarters and nearby Towson branch before the offices closed at 6 p.m. About 60 FDIC employees entered the headquarters building and branch, where they addressed Bradford employees.

Several workers left, looking somber and declining to comment.

FDIC, M&T and Bradford officials were expected to work throughout the night and into the weekend.

On July 24, federal regulators ordered Bradford to sell itself within 30 days. The savings institution had been under heightened federal supervision since February, when the Office of Thrift Supervision issued a "cease and desist" order.

Regulators noted the thrift's aggressive loan practices, particularly in making construction loans, and said they were not properly managed. They ordered the company to stop originating commercial, construction and nonresidential real estate loans.

As of June 30, the thrift reported $40.2 million in nonperforming loans, according to the latest financial report filed with the Office of Thrift Supervision. Bradford lost $3.2 million in the second quarter, on top of a $13.9 million loss in the first quarter.

Bradford filed papers last fall to conduct a stock offering but was stymied by the poor market.

"This is a bank that had been in trouble," said banking consultant Bert Ely. "They weren't able to get it turned around."

Watler of the FDIC said the federal agency received 266 bids for Bradford, with M&T submitting the most cost- effective proposal.

Michael P. Pinto, M&T's vice chairman and chief executive of its Mid-Atlantic division, cited Bradford's culture and 106-year history as reasons for acquiring the bank's deposits.

"It's got a long tradition of being a community bank, and that's what we are," Pinto said.

M&T expects to keep Bradford's 88 employees, but Pinto said their roles could be different. M&T executives will take the next month to determine whether to keep Bradford executives as well as evaluate possible branch closings.

M&T has branches near seven of Bradford's nine branch locations. Bradford has branches in Towson, Lutherville, Jacksonville, Pikesville, Parkville and White Marsh - all in Baltimore County - as well as branches in Patterson Park in Baltimore City, Ellicott City in Howard County and Glen Burnie in Anne Arundel County.

In December, M&T acquired Provident, the largest remaining Maryland-based banking company, increasing its hold in the Baltimore and Mid-Atlantic region. M&T had $69.9 billion in assets and $46.8 billion in deposits as of June 30.

M&T closed six former Provident branches and converted 135 others, bringing to 253 the number of full-service branches in Maryland.

Ely said M&T gains some market share with Bradford's nine branches, adding that he expects M&T to cut Bradford's back-office costs and offer a wider range of products to the former Bradford customers.

"Given M&T's presence in the Baltimore area, they are a very logical acquirer," he said.

Bradford is among several local banks suffering in the collapse of the real estate market. Those operating under more intense federal supervision include Eastern Savings Bank of Hunt Valley and K Bank of Owings Mills.